If the loans are priced competitively, which loan should have the lowest initial interest rate?

a. Loan 1

b. Loan 2

c. Loan 3

d. Loan 4

Which loan is a FRM?

a. Loan 1

b. Loan 2

c. Loan 3

d. Loan 4

With which loan is the lender least exposed to interest rate risk?

a. Loan 1

b. Loan 2

c. Loan 3

d. Loan 4

Loan 4 Loan 1 ? ? 20 20 Item Initial Interest Rate Loan Maturity (years) Adjustment Interval Points Interest Rate Cap Loan 2 ? 20 no adjust. 1 0 Loan 3 ? 20 1 1 1%/year 1 1 1 1 None 3%/year